The author is a Forbes contributor. The opinions expressed are those of the writer.

Loading ...

Loading ...

This story appears in the {{article.article.magazine.pretty_date}} issue of {{article.article.magazine.pubName}}. Subscribe

The movement to repeal the health care reform act in the U.S. merely touches the surface of a deeper problem. A better "repeal" agenda would focus on undoing, and re-thinking, much of the FDA regulatory regime and other barriers to innovation in health care.

Anyone who has benefited from an MRI exam, a new drug therapy or a high-tech surgical procedure knows the value of biomedical innovation. And anyone with a disorder that still defies effective care knows the need to keep innovation going. What’s more, this innovation pays multiple economic benefits. For over a century, new medical treatments and the businesses that bring them to market have employed millions of people, helping the rest of us to be healthier and more productive in our own lines of work.

Yet lately the virtuous cycle has begun to bog down. In the past 15 years, despite a doubling of federal funds for biomedical R&D, the number of new drugs approved by the FDA and coming to market has decreased by nearly half -- from around 40 per year in the late 1990s to a little over 20 per year since 2005. Pre-market testing to meet FDA requirements has become such a huge factor in drug development budgets that it’s hard for companies to even consider working on new products with limited market potential.

Other obstacles have grown too, mostly from a long-running accretion of government controls and bureaucratic bottlenecks. Historically, the emergence of modern medicine coincided with the rise of activist government in the U.S. Both had their roots in the late 1800s and early 1900s, and the health-related industries became prime targets for utopian policy-makers intent on safeguarding the public from insecurity and harm. Unfortunately, their protective efforts have built a battery of hurdles and fences through which innovation can pass only with great difficulty.

In any industry within a free-market society, the innovative process works best when it is allowed to be "messy." Lots of people are constantly trying new things, starting new companies and subjecting them to the test of the marketplace. From the cauldron of this market testing a higher order emerges, and the march of progress ensues.

And so it was in the early days of the pharmaceutical industry. Before FDA control, which took hold in the years after the Pure Food and Drug Act of 1906, the market was largely without barriers. A pharmacist might bring forth Bromo-Seltzer, or Noxzema, or Coca-Cola, or little liver pills or laudanum. Market forces would then determine if the product had value. Only tort liability acted as a check on the manufacturer, and, interestingly, there were few lawsuits.

Although extravagant claims were often made for "patent" medicines, the consumer was presumed to have common sense and to undertake some risk in all things. It was also presumed that manufacturers would follow high standards if they wished to stay in business, and indeed many firms and products from that era are still with us today. The Smith Brothers were trusted to make cough drops in a clean factory with good ingredients. Johnson & Johnson became a trusted name -- as did Eli Lilly.

Gradually, however, government oversight began to pre-empt the discipline of the marketplace. While the Pure Food and Drug Act was a modest start (on the "drug" side, it mainly regulated the labeling of medicines), the Food, Drug and Cosmetic Act of 1938 took a significant step. This post-New Deal legislation empowered the FDA to require pre-market evidence of the safety of new drugs, such as by testing on animals. Then, from 1962 on, amendments expanded the Act to build out our present regime. Both drugs and devices must now be pre-certified for efficacy as well as for safety, in stages from lab testing to clinical trials, before ever having a shot at the market.

Meanwhile the courts have shackled product innovators in a separate way, by greatly expanding the risks of tort liability. After the medical findings about asbestos in the 1960s, it became possible to sue for damages correlated with long-latency exposure to a substance. Also, federal rulings in the '60s opened the door to class action lawsuits, which had been rare before, and a sympathetic judiciary made it far more common to apply "strict" liability, whereby manufacturers can be held liable for harm resulting from use of a product even if they have tried diligently to assure its safety.

All of the foregoing dissuades market entry. Worse yet, insular decision-making and bureaucracy have eaten away at basic research, the genesis of innovation. Research at universities has shown diminishing returns in terms of papers published and patents issued per dollars of funding. There is concern too that in many areas of medicine where better treatments are urgently needed, promising new lines of research are getting little support if any.

Is biomedical innovation in danger of grinding to a halt? No; it is being carried forward with vigor outside the U.S., in places from Singapore to the more progressive Arab states. But its future in this country is in peril unless we take steps to reduce barriers and open up the game.

The work should begin with a shakeout of the FDA regulatory apparatus, an archaic structure that can no longer cope with the pace and complexity of modern bioscience.

The agency’s regimes for product testing and control need to be streamlined -- perhaps by adopting a new, quicker-to-market model such as "adaptive" regulation -- and some aspects could be stripped away entirely. One approach would be to have the FDA go on approving drugs and devices for safety, but let the market determine efficacy, at least to a greater extent than at present. Also, once a treatment has passed the FDA’s safety exam, why not reduce the added hurdle of tort liability by exempting the makers from punitive damages?

The re-invigoration of research ought to include a new grant making process at NIH. Currently, the National Institutes use peer review by prestigious scientists to identify the best proposals. This may seem a logical system, but too often it amounts to an in-group of mandarins funding types of research they deem fashionable or are already familiar with, and the cycles of proposal and review are painfully slow. Surely we can devise faster, more targeted ways of funding research. Work by the Myelin Repair Foundation points to one way of doing so, using a utility model of aiming the research at cures, as does the Milken Foundation’s "Faster Cures" philosophy.

"Do no harm" is a key principle of medical practice. Likewise, innovation in biomedicine must be done with care. However, we are proceeding in such a hidebound manner as to suppress innovation, which in the long run will do the greatest harm of all. It is time to reverse course and restore the vital balance.